Rehearing and Rehearing En Banc Denied May 17, 1974.
THORNBERRY, Circuit Judge:
The sole question presented for review is whether appellee's marina is an "amusement or recreational establishment" within the meaning of 29 U.S.C.A. § 213(a)(3) and thus exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act.
The parties have stipulated to the relevant facts. Appellee Texas City Dike & Marina, Inc. owns a marina that dispenses goods and services to people pursuing the leisure time activities of boating and fishing. Located on the shores of the Gulf of Mexico in Texas City, Texas, the marina stores, repairs, and maintains recreational boats; sells boats, motors, trailers, gasoline, and oil; rents boats and motors; provides dockside facilities for launching and retrieving boats; and sublets space for a grocery store and a bait stand. In the year in question, 1970,
Appellee Texas City Dike & Marina denies that the marina's principal activity is selling recreational equipment; its principal activity is providing "the means for recreational boating and fishing in and on the Gulf of Mexico." Appellee contends it is misleading to determine the marina's principal activity by using an income analysis, as the Secretary has done. Since its principal activity is providing recreational means and facilities, it is entitled to a recreational exemption under section 213(a)(3).
If there is any unifying principle underlying the exemptions in the FLSA, it is not evident in the Act's words or its legislative history. Reading the Act's legislative history and its exemptions leads one to conclude that the exemptions were created simply to ensure the Act's passage. Without the exemptions, the Act's opponents may have prevailed. See 107 Cong.Rec. 7102-5 (1961) (Remarks of Senators Holland and Dirksen); Comment, Scope of Coverage Under the Fair Labor Standards Act of 1938, 30 Wash. & Lee L.Rev. 149, 156 (1973). The absence of a unifying principle makes the exemptions' interpretation a difficult task.
The ground rules for interpreting and applying FLSA exemptions disfavor the employer. The Supreme Court has said:
A. H. Phillips, Inc. v. Walling, 1945, 324 U.S. 490, 493, 65 S.Ct. 807, 808, 89 L.Ed. 1095. See Hodgson v. Colonnades, Inc., 5th Cir. 1973, 472 F.2d 42. Therefore we must construe exemptions narrowly against the employer seeking to assert them. Arnold v. Ben Kanowsky, Inc., 1960, 361 U.S. 388, 80 S.Ct. 453, 4 L.Ed.2d 393; Mitchell v. Kentucky Finance Co., 1959, 359 U.S. 290, 79 S.Ct. 756, 3 L.Ed.2d 815; A. H. Phillips, Inc. v. Walling, supra. The employer has the burden of proof to show that he is entitled to an exemption. Idaho Sheet Metal Works, Inc. v. Wirtz, 1966, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694; Arnold v. Ben Kanowsky, Inc., supra.
With the burden of proof and manner of construction in mind, we turn now to the exemption that appellee asserts.
29 U.S.C.A. § 213(a)(3) (Supp.1973). The exemption contains two requirements. The establishment must be (1) seasonal and (2) recreational. Appellee's marina unquestionably satisfied the
In interpreting and applying the exemption, our starting point will be its legislative history. Although it is skimpy, it suggests that the exemption does not cover establishments whose sole or primary activity is selling goods.
Subdivision (2) of section 213 reinforces the legislative history's suggestion that establishments selling goods do not qualify for an amusement-recreation exemption. It specifically provides a separate exemption for retail establishments whose annual sales of goods fall below $250,000. 29 U.S.C.A. § 213(a) (2) (Supp.1973).
Further support can be found in the Wage and Hour Administrator's various interpretations of the amusement-recreation exemption. Among the activities which the Administrator believes to be eligible for the exemption are golf courses,
To be sure, in some instances the Administrator has approved amusement-recreation exemptions for enterprises that solely or primarily sell goods. Examples are pro shops at golf courses
Section 213(a)(3) exempts amusement or recreational establishments. Since the marina is not an integral part of a larger establishment, or of a supervised, geographically delimited recreational area, the "establishment" is the marina itself. Our task is to decide whether it can be characterized as "amusement or recreational" in nature.
Characterizing the marina is made difficult by the variegated nature of the goods sold and services performed on its premises. The marina sells products ranging from expensive marine hardware to cheap convenience items, and performs a variety of boat maintenance services. While it may be somewhat artificial to apply one label to such a varied mixture of activities, the Act requires that we must. After all, our task is to decide whether the amusement-recreation tag should be applied to appellee's marina.
Since the marina's activities are multifaceted, we have concluded that its principal activity should be determinative of the marina's eligibility for an exemption.
In this case, the marina derived fifty-seven percent of its income from boat, motor, and trailer sales.
We believe our refusal to grant appellee an exemption produces an equitable result. If one's principal business is selling expensive equipment, he has no unusual need for cheap labor. To appreciate this point one need only contrast a sporting goods store with a baseball park and its army of ushers, ticket takers, maintenance workers, and food vendors.
To summarize, we conclude that appellee's marina is principally engaged in selling boats, motors and trailers. The language, legislative history, and previous administrative interpretations of the FLSA all indicate that such an activity was not intended to be exempt under the rubric of amusement and recreation. Therefore we reverse the decision below and remand for the trial court to issue an appropriate injunction and award back pay for the year 1970.
Reversed and remanded.
Boats, motors and trailer sales $ 244,977.00 Petroleum products 31,032.00 Bait 7,883.00 Shop parts 44,045.00 Shop labor 26,527.00 Boat storage 41,669.00 Boat and motor rentals 11,291.00 Fork lift fees 14,173.00 Grocery stand sublet 767.00 Miscellaneous 1,881.00 Bait stand sublet 2,365.00
In Wage-Hour Op. Letter No. 1170 (April 9, 1971), CCH Lab.L.Rep. ¶ 30,740 [Transfer binder, Mar. 1969-June 1973], the Administrator approved an amusement-recreation exemption for a combination souvenir stand-bus service at a Civil War battlefield. The opinion letter does not state, however, whether souvenir selling was the establishment's principal activity.